Sielox Reports Second Quarter Sales Growth of 82.5% and Significant Improvement in Financial Performance

RUNNEMEDE, N.J., Aug. 15  /PRNewswire-FirstCall/ -- Sielox, Inc. (OTC:SLXN) (BULLETIN BOARD: SLXN) , a developer, designer and distributor of security solution and industrial vision products, announced today its results for the second quarter and six month periods ended June 30, 2008.  Total revenue reached $7.3 million for the second quarter and $13.9 million for the first six months of 2008, representing increases of 82.5% and 69.5%, respectively, when compared to the same periods in 2007.  Operating income for the second quarter improved year-over-year by $212 thousand to $12 thousand.  The Company's net loss for the second quarter improved year-over-year by $162 thousand to $(10) thousand.

Sam Cassetta, Chief Executive Officer of Sielox, stated, "I'm pleased to report significant improvement in Sielox's financial progress in the second quarter in which the addition of new products, an aggressive sales strategy and an improved sales force began yielding results.  Sielox's innovative products and world-class support and service have made the Company the vendor of choice for several Fortune 500 companies who seek to invest in store security and surveillance."

He added, "The integration of Sielox's two divisions, Costar Video Systems and Sielox LLC, has generated cost efficiencies and synergies in sales to dealer clients.  The Company anticipates further improvements in revenue growth as we launch new products and technologies for the security industry."

Sielox, Inc. develops designs and distributes a wide range of security solution products such as surveillance cameras, lenses, digital video recorders, high speed domes and access control systems.  The Company also develops designs and distributes industrial vision products to observe repetitive production and assembly lines, thereby increasing efficiency by detecting faults in the production process.  Founded in 1986 and headquartered in Runnemede, NJ, Sielox's shares trade on the OTC market under the ticker symbol "SLXN".

A complete copy of the Company's Form 10-Q for the quarterly period ended June 30, 2008 can be downloaded at http://www.sielox.com/ (click on the Company Information link, then click on the Investor Relations link) or at the SEC's web site at http://www.sec.gov/.

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume" and other similar expressions which predict or indicate future events and trends and which do not relate to historical matters. You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. Our actual results could differ materially from those set forth in the forward-looking statements.

Forward-looking statements herein are based on information, plans and estimates at the date of this release, and we do not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

  CONTACT:
  Mel Brunt
  Chief Financial Officer
  Sielox, Inc.
  [phone]


                      SIELOX, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                             ($ in thousands)

                                      June 30, 2008        December 31, 2007
                                       (unaudited)             (audited)
  ASSETS
  Current assets:
  Cash and cash equivalents                $716                 $1,422
  Short-term Investments                    405                    889
  Accounts receivable, net of allowance
   for doubtful accounts of $40 and
   $25 in 2008 and 2007, respectively     4,290                  3,920
  Inventory, net of reserve for
   obsolescence of $201 and $194 in
   2008 and 2007, respectively            5,694                  7,005
  Prepaid expenses                          401                    484

  Total current assets                   11,506                 13,720

  Fixed assets, net                         292                    354
  Goodwill                                1,229                  1,229
  Trade Name - Costar                     1,587                  1,587
  Trademark - Sielox, LLC                   300                    300
  Distribution agreement, net             1,321                  1,358
  Customer relationships, net             1,066                  1,198
  Proprietary technology, net               443                    474
  Long-term prepaid expenses                361                    347
  Deposits                                   66                     67

  Total assets                          $18,171                $20,634

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
  Accounts payable                       $2,401                 $3,664
  Accrued expenses and other                363                    527
  Contingent purchase price,
   current portion                          700                    700
  Line of credit                          1,808                  1,761

  Total current liabilities               5,272                  6,652

  Long term liability, contingent
   purchase price                           349                    983
  Total liabilities                       5,621                  7,635
  Commitments and Contingencies

  Stockholders' equity:
  Common stock, $0.001 par value;
   90,000,000 shares authorized;
   42,016,924 shares issued
   and outstanding.
                                             42                     42
  Additional paid-in capital            155,788                155,774
  Accumulated other
   comprehensive income                     260                    260
  Accumulated deficit                  (139,070)               (138,607)
                                         17,020                  17,469
  Less: Common stock held in
   treasury, at cost; 6,116,241 shares
   at June 30, 2008 and
   December 31, 2007                     (4,470)                 (4,470)
  Total stockholders' equity             12,550                  12,999
  Total liabilities and
   stockholders' equity                 $18,171                 $20,634


                      SIELOX, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       ($ in thousands, unaudited)

                                     Three Months Ended  Six Months Ended
                                           June 30,           June 30,
                                          2008    2007       2008    2007
  Net revenues                          $7,311  $3,975    $13,895  $8,183
  Cost of revenues                       5,126   3,122      9,917   6,450
  Gross profit                           2,185     853      3,978   1,733

  Selling, general and administrative
   expenses                              2,173   1,053      4,403   1,987
  Income / (Loss) from Operations           12    (200)      (425)   (254)

  Other Income (expense)
       Interest income                       9      47         25      82
       Interest expense                    (31)    (19)       (63)    (31)
  Total other income (expense), net        (22)     28        (38)     51

  Net Income / (Loss)                     $(10)  $(172)     $(463)  $(203)

  Net  loss per share:
  Basic                                $   -    $(0.01)    $(0.01) $(0.01)

  Diluted                              $   -    $(0.01)    $(0.01) $(0.01)

  Weighted average number of common
   shares
  outstanding:
  Basic and diluted                     35,982  23,692     35,982  23,692



                      SIELOX, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       ($ in thousands; unaudited)

                                                       Six Months Ended
                                                           June 30
                                                    2008            2007
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                         $(463)          $(203)
  Adjustments to reconcile net loss to
   net cash used in operating
   activities
  Stock based compensation                            14
  Depreciation and amortization                      287             192
  Provision for doubtful accounts                     14              (1)
  Change in cash attributable to
   changes in operating assets and
   liabilities
  Accounts receivable, net                          (384)           (325)
  Inventories, net                                 1,311            (535)
  Prepaid expense                                     83              (1)
  Long term prepaid expenses                         (14)            119
  Accounts payable                                (1,263)             99
  Accrued expense and other current
   liabilities                                      (164)             31

  Net cash used in operating activities             (579)           (624)

  CASH FLOWS FROM INVESTING ACTIVITIES:

  Proceeds from sale of short term
   investments                                       484
  Purchase of fixed assets                           (25)            (60)
  Payment of earn out provision related
   to Southern Imaging                              (634)           (542)
  Net cash used in investing activities             (175)           (602)

  CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from line of credit                        47             399
  Deposits                                             1
  Net cash provided by financing
   activities                                         48             399

  NET DECREASE IN CASH AND CASH
   EQUIVALENTS                                      (706)           (827)
  CASH AND CASH EQUIVALENTS, BEGINNING
   OF PERIOD                                       1,422           2,938

  CASH AND CASH EQUIVALENTS, END OF
   PERIOD                                           $716          $2,111

  SUPPLEMENTAL DISCLOSURE CASH FLOW
   INFORMATION:
  Cash paid for interest                             $39             $33


DATASOURCE: Sielox, Inc.



CONTACT:  Mel Brunt, Chief Financial Officer, Sielox, Inc.,

[phone]

Copyright